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London Calling Has A Tiff With Dfid...and A Bouquet For Rio Tinto

Published by MAC on 2006-03-22

London Calling has a tiff with Dfid…and a bouquet for Rio Tinto

by Nostromo Research

22nd March 2006

Last week, Nicanor Alvadora of the Peruvian community organisation, VIMA, addressed a meeting in the British House of Commons (parliament) on the first leg of a European tour, aimed at forcing AIM-registered mining company, Monterrico Metals, to quit northern Peru. He revealed that, on March 12th , goons from the company had attacked community leaders organising a peaceful farmers’ forum. It wasn’t the first time company opponents had been targeted – two protestors have already been killed and around 140 others arrested.(See MAC's latest Latin America Update on this site).

Present at the Commons meeting was a representative of the UK government's Department for International Development (DfID), who didn’t make any comment on the Nicanor’s allegations. Dubbed "the first cousin of the World Bank" at a recent Action Aid conference for “refugees” from a London-based joint Asia Development Bank-DfID "strategy" meeting, the DfID has long tried running with the hares (supposed community leaders, while hunting with the hounds (UK companies).

The Department was, for example, implicated in bringing Britain's most notorious Indian-based mining company, Vedanta, to the market in late 2003. More recently it's been accused of trying to spike opposition to Asia Energy plc's huge open-pit Phulbari coal venture in Bangladesh. As another new posting on this website points out, the company's CEO has now attacked the country's own official advisor on energy policy, even accusing him of being "anti-state".

A fall guy?

For show's sake, the UK ambassador to Bangladesh has "discussed" this storm in an open cut, with Asia Energy's Gary Lye. You won't get many brown coal points for reckoning that Mr. Lye's sally against a respected Bangladeshi citizen is privately endorsed by Her Majesty's representative in Dhaka, with backing from the UK government.

Several months ago, the British ambassador to Peru also went on record as supporting Monterrico Metals' Rio Blanco project. Ambassador Richard Ralph even had the gall to state that UK mining norms are "among the most rigorous in the entire world" - a statement as daft as it is disingenuous (see article below).

Try telling that to the day labourers at Vedanta's bauxite mines in the Indian state of Chhattisgarh. Or to farmers downstream of wastes, spewed from Xstrata's Alumbrera operations in Argentina.

Such diplomatic interventions are by no means exceptional. In 2002, the UK ambassador to Romania intervened directly with the Bucharest government, to push Mittal Steel's bid for the state smelting company, Sidex. No competitive tenders were offered, and Lakshmi Mittal got the plant for a knockdown £300 million. This came shortly after the company's eponymous founder handed a cool quarter of a million pounds to the Labour Party. Although Britain's prime minister claimed he knew nothing about this particular sleazy deal, four years later Tony Bliar himself intervened to support Oxus Gold, when the new, popularly-elected president of Kyrgyzstan cancelled the AIM-listed company's contract. In his rebuke, Bliar berated president Kurmanbek Bakiyev for not "living up to obligations under his [Bliar's] global anti-corruption initiative". Just five weeks later, the UK prime minister himself was under siege, for allowing honours to be sold in exchange for massive secretive loans made to his political party.

Ever since the late 1990s, when DfID joined the World Bank and CARE to sponsor the mining component of the tri-sectoral "Business Partners for Development" programme, sustainable development has been equated by the British government with support for highly dubious minerals ventures overseas.

DfiD also backed Mark Moody-Stuart of Anglo American, and Robert Wilson of Rio Tinto, through the World Business Council for Sustainable Development, when these captains of industry launched so-called "Type Two" partnerships (between businesses, governments and handpicked NGOs) at the Johannesburg World Summit for Sustainable Development in 2002.

There's now little doubt that, when critics upbraid the World Bank, they should also take on board what the DFiD is getting up to.

A nice guy

Is the world's second most powerful mining company undergoing minor policy shifts? First, it denies that recent talks with the Papua New Guinea government may herald a return to Bougainville - despite PNG statements implying the contrary. Now it seems to be distancing itself from the draconian "revision" of labour laws in Australia, which it advocated only four months earlier. Indeed, this new code had largely been by the company as a culmination to the anti-union campaign it launched in Australia around ten years ago.

A swallow doesn't make a summer; nor do a few shafts of sunlight indicate that Spring has finally arrived in the corridors of 6 St James Square.

However, Rio Tinto's chief executive, Leigh Clifford is shortly to retire; a few of his political positions may also be on the way out. This bluff, hard-edged Aussie started honing his mining skills at Rio Tinto's Broken Hill operations in 1970. He became mining director of Rio Tinto Australia in 1996 and, six years later, took over from Robert Wilson as CEO.

Clifford's successor hasn't yet been chosen, though the odds are on Guy Elliott, currently the company's finance director. According to one observer, Elliot is "a lovely bloke, just the kind of person you would want as a next door neighbour. You can't say that about Leigh Clifford."

And indeed, there are numerous locals who wouldn't say that about the current figurehead of the world's most aggressive big mining outfit; not to mention some shareholders.

Former Financial Times mining editor, Ken Gooding, has a "favourite memory" of Clifford. Just after the Australian was appointed to Rio Tinto's main board in 1994, "he was at the group's annual meeting, one that was attended by some particularly rowdy environmental protestors. At one point a man at the front stood on his chair and started shouting at the top of his voice. He then made a dash for the stage on which the directors were arranged.

"Not knowing what the protestor had in mind, most of the directors cringed back, some disappearing behind their table. But not Mr. Clifford who is a very tall, very well-built man.

"Instinctively he was on his feet, chest thrust forward and a clenched first drawn back ready to tackle the protestor.

But then, Clifford “suddenly remembered where he was - at the annual meeting of one of the UK's major public companies - and rather sheepishly...dropped the fist to his side and settled back in his seat".

In just over two weeks time, Clifford will be presiding over his own retirement at Rio's 2006 annual general meeting. These days (alas) no one is likely to approach the platform - except perhaps to offer the lovely Mr Elliott a bouquet of snowdrops.

Rio Tinto's likely "New Face" is as round and benign as a one pound coin; as soft and innocuous as a tin of talc.